Senate Appropriations Chmn. Stevens (R-Alaska) told the leadership of the Federal-State Joint Board on Universal Service reform he would oppose restricting the universal service fund (USF) to a single line. In a Jan. 22 letter to FCC Comr. Abernathy and Alaska Regulatory Comr. Nanette Thompson, who are co-chmn. of the board, Stevens said restricting USF to the primary line is “contrary to the fundamental purposes for universal services.” Stevens said the restriction to a single line would favor urban consumers over rural consumers. Extending USF to multiple lines would let rural carriers build out network facilities, he said. “I also worry that limiting support to primary lines would also become burdensome on small businesses operating in rural areas because they would be forced to pay higher rates for their telecommunications services in high-cost areas than they would pay in urban areas,” Stevens said. He also said he worried a “split decision” by the Board would result in confusion in rural areas and deter investment. “It is my hope that the Joint Board will be able to find a unified solution that will encourage investment in the rural markets rather than cause confusion,” Stevens said.
As part of an effort to persuade the FCC to eliminate rate-of-return (ROR) regulation of rural ILECs (RLECs), Western Wireless gave the Commission a study titled “How Rate of Return Regulation Transformed the USF [Universal Service Fund] for Consumers into Corporate Welfare for the RLECs.” The study by Economics & Technology Inc. (ETI), included in Western Wireless’s reply comments filed Feb. 13 (CC Doc. 96- 45), said more than $1 billion in excess funding goes to rural ILECs and more than $500 million of their corporate operations expenses appeared to represent inefficiencies. Western Wireless -- which petitioned the FCC to open a rulemaking to eliminate ROR regulation of rural ILEC -- said the agency also should eliminate ROR-based access charges as part of intercarrier compensation reform and should recommend to the Federal-State Joint Board on Universal Service a way to replace ROR-based universal service support mechanisms “with a competitively neutral, forward-looking, least-cost technology-based universal service funding mechanism for all carriers.” A group of rural ILECs from Neb. told the FCC, also in reply comments, that some of Western Wireless’s comments “misrepresent the facts.” The Neb. companies said: “Innuendo, and not facts, is the only information that has been supplied to support the charge that the growth of high- cost universal service support [is caused by] ROR regulation.” The Neb. ILECs said the issues raised by the Western Wireless petition are being addressed in other proceedings so it’s “unnecessary and wasteful” to open another rulemaking as proposed by Western Wireless.
The Telecom Industry Assn. (TIA) urged the FCC to grant Pulver.com’s petition seeking a ruling that the company’s Free World Dialup (FWD) isn’t a telecom service, saying that would be “appropriate” and “timely.” The FCC is set to consider the petition at its agenda meeting Feb. 12. In an ex parte meeting last week with Jessica Rosenworcel, aide to FCC. Comr. Copps, the TIA argued VoIP wasn’t just another way of providing traditional phone service, but was “a new application on a new kind of network.” In a separate ex parte meeting with FCC Comr. Martin and aide Dan Gonzalez last Thurs., Cisco Systems said the Commission should: (1) Declare that Pulver.com’s FWD service was an interstate information service. (2) Address applicability of CALEA to different IP services, as well as issues raised by an AT&T petition on phone-to-phone IP telephony, in an “industrywide proceeding.” In a separate ex parte filing, Vonage stressed the importance of moving forward “expeditiously” with the pending VoIP NPRM. Addressing universal service, Vonage said it favored a contribution mechanism that would let VoIP providers contribute on a “more formal basis.” It also noted Sec. 254 of the Telecom Act provided the Commission broad discretion to modify Universal Service Fund (USF) contribution methodology.
An AT&T petition seeking exemption of phone-to-phone IP telephony from access charges could hurt rural telecom carriers, several associations said in an ex parte filing with the FCC last week. In an ex parte meeting with FCC Comr. Copps and aide Jessica Rosenworcel preceding the filing, the National Exchange Carrier Assn. (NECA), joined by Alltel, Independent Telephone & Telecom Alliance (ITTA), NTCA, OPASTCO and USTA urged the Commission to act quickly and dismiss the AT&T petition: “Continued FCC inaction only invites more ‘free riders’ and exposes rural consumers to unnecessary risk.” They warned the Commission that rural telephone consumers were particularly at risk because: (1) Access charges accounted for more than $2 billion in small company revenue. (2) Access revenue represented 70% of small telco revenue. (3) An access charge exemption of long distance companies’ phone-to-phone IP telephony services “could threaten the financial viability of small rural LECs and could affect consumers and impair customer service efforts by forcing rural LECs to delay network upgrades.” (4) Such an exemption could release long distance carriers from contributing to the Universal Service Fund (USF), which would “greatly threaten the viability of the fund and the provision of universal telephone service to rural consumers.” The associations also argued that AT&T’s use of IP technology to carry a call did “not equal ‘net protocol’ conversion. Calls originate as TDM and end as TDM -- nothing new here.” It also didn’t reduce LECs’ costs of originating or terminating calls, they said. The associations warned that AT&T’s request for “preferential treatment that favors a specific technology” was “an attempt at regulatory arbitrage.” They urged the Commission to treat phone-to- phone IP calls as traditional long distance when addressing the application of interstate access charges. “Reciprocal compensation payments are no substitute for access charges,” they said, and those arguing that continued application of access charges to AT&T would impair Internet growth “offer no evidence to support their claims.” If the AT&T petition is granted, the associations said, all carriers that had to pay access charges would use IP telephony, “gutting the access charge system and leaving SLCs and USF to make up the difference.” They urged the Commission to dismiss the petition “promptly on procedural grounds… Since AT&T is not claiming that it is an ISP, the relief it requests cannot be granted via declaratory ruling.” Meanwhile, AT&T continued to push the FCC to exempt the company from paying access charges when providing its phone-to-phone VoIP services. In ex parte meetings and in telephone conversations with FCC top staffers last week, AT&T said issues related to universal service and access charge contribution affected by the intersection of IP technology with the Public Switched Telephone Network (PSTN) would be “better addressed holistically in an intercarrier compensation reform proceeding that eliminated the access charge regime entirely rather than begin the process of importing the competition- distorting access charge regime into this new technology.”
Senate Communications Subcommittee Chmn. Burns (R-Mont.) said legislation affecting wireless privacy probably would be introduced this year and could pass. In a forum Mon. on telecom issues sponsored by The Hill newspaper, Burns said wireless privacy was an issue -- like the Do-Not-Call list -- that could get a quick response from Congress. He said he was working with Sen. Wyden (D-Ore.) and expected to introduce a bill this year, although he didn’t provide details on what aspects of wireless privacy it would address. Burns said there probably would be a hearing on the Universal Service Fund (USF) within the next 60 days. He said he had concerns about USF spending, including allegations of abuse in the E-rate program, but said legislators should focus first on how USF was funded, “then we'll worry about how the dollars are used.” Burns has floated draft legislation that would require intrastate telecom revenue be subject to USF. He said progress could be made soon on the impasse over the Internet tax moratorium. Burns said the issue was discussed at the recent Republican retreat in Philadelphia and “we may have made some headway.” The bill (S-151) by Sen. Allen (R- Va.) would establish a permanent moratorium on Internet access taxes. But Sens. Alexander (R-Tenn.), Voinovich (R- O.) and Carper (D-Del.) have expressed concerns that the bill also would strip states of their existing authority to levy telecom taxes. Burns said progress made at the retreat was stalled by the discovery of Ricin in the Dirksen Bldg., which “disrupted” negotiations. He said that the U.S. needed to do a better job of broadband deployment and that it was “time to set policy that will foster a broadband build-out.” VoIP will be an important issue, he said, specifically on the USF, but “all of the questions haven’t been answered” and lawmakers and regulators still needed to study the issue. Burns said communications could help improve the political climate in the Middle East. He said if the U.S. were successful in Iraq, it would lead to a “transportation and communication corridor” that could stretch from Tel Aviv to Kuwait City.
Vonage CEO Jeffrey Citron warned Fri. that “premature regulations could kill the nascent VoIP industry.” Speaking at a policy lunch sponsored by the Progress & Freedom Foundation in Washington, Citron said regulations could slow broadband deployment, undermine the U.S. position as a technological leader and force service providers offshore. He urged legislators to “bring clarity to the VoIP regulatory framework to protect competition. New laws are needed to ensure Internet applications remain free from regulation.”
Sprint Chmn. Gary Forsee called on the FCC to bring “much-needed clarity by promptly ruling that phone-to-phone VoIP should pay access charges.” Speaking at a Sprint investors meeting Wed. in N.Y., he said his company would take a high profile in addressing VoIP issues this year, pushing regulators to eliminate regulatory uncertainty: “Our perspective is to take prudent positions on initiatives such as UNE-P and VoIP to minimize the effect of regulatory mixed messages.” He expressed concern that “regulatory uncertainty” could interfere with the industry’s moving forward: “What this industry needs from regulation is clear, rational rules, especially surrounding VoIP and intercarrier compensation. Right now it’s a mess.”
Although Rep. Barton (R-Tex.) is mainly an energy expert, he could help lead the next overhaul of telecom regulations if he takes over the House Commerce Committee Feb. 16. Committee Chmn. Tauzin (R-La.) resigned Tues., effective that day, and said he wouldn’t seek reelection. Barton is widely regarded as front-runner for chairman, and he acknowledged Wed. he was seeking the job. He has a limited track record on communications, but sources -- and his own comments -- indicate he would be likely to push for comprehensive telecom reform in 2005.
The FCC would benefit from a Presidential budget that cuts spending in many other domestic areas. The budget, released Mon. by the White House, proposed a nearly $20 million increase for the FCC and a slate of new programs for NTIA. The $2.3 trillion budget forecasts a $521 billion deficit, and several domestic agencies saw spending cuts.
With the FCC preparing to conduct a comprehensive study of how the federal govt. should regulate VoIP, NCTA for the first time laid out what the cable industry saw as the regulatory regime it would like. In a white paper sent to FCC commissioners and Capitol Hill Mon., NCTA said federal and state policy-makers should be careful not to overregulate this new technology and service and, in fact, should impose minimal regulation. Such an approach to VoIP could have potential implications for the Universal Service Fund (USF) and the Communications Assistance for Law Enforcement Act (CALEA) which are funded under traditional common carrier regulations.